Key takeaways:
Bitfinex Bitcoin margin longs hit two-year highs, but arbitrage suggests this isn’t a purely bullish price indicator.
Bitcoin price drops as tech stock valuations and gold gains drive investors toward cautious, risk-averse behavior.
Bitcoin (BTC) price plummeted to its lowest level in over two months on Thursday, retesting the $84,000 support. This sell-off aligned with a broader move toward risk aversion after Microsoft (MSFT US) shares tanked 11% following reports of increased capital expenditures and disappointing quarterly cloud server revenue.
Investors are currently analyzing why demand for bullish margin positions surged to a two-year high despite a 26% price decline over the past 90 days. Some traders worry that excessive leverage could spark further forced liquidations, especially after $360 million in BTC futures positions were wiped out on Thursday.
Demand for margin longs on Bitfinex reached its highest point since November 2023, totaling 83,933 BTC. While the nominal $7.3 billion position is significant, the borrowing cost remains under 0.01% annually because Bitfinex requires collateral deposits that exceed the value of the loan. Many traders choose margin over futures to avoid the “carry cost,” which currently hovers around 5% per year for BTC futures.
Monthly BTC futures typically trade at an annualized premium of 5% to 10% compared to spot markets, accounting for the longer settlement time. Bullish periods usually push this indicator above the 10% neutral threshold. This last occurred in early February 2025, when Bitcoin traded near $103,500.
Rising Bitfinex Bitcoin longs are neutral due to offsetting arbitrage
Professional traders often utilize “cash and carry” strategies to exploit the rate gap between futures and margin markets. Consequently, the net impact of the rising Bitfinex longs is likely neutral, as the arbitrage requires selling BTC futures contracts simultaneously. Therefore, this spike in margin activity should not be interpreted solely as an expectation of upward price movement.
A lack of confidence among Bitcoin traders can be partially attributed to fears regarding overvaluation in the artificial intelligence sector. Sundar Pichai, CEO of Google, said there were “elements of irrationality” and acknowledged the intensive energy needs of the ever-expanding AI infrastructure. According to the BBC, these valuations have led many analysts to express skepticism.
Microsoft, valued at $3.5 trillion, saw its stock decline accelerate after reporting $625 billion in “remaining performance obligations,” or unpaid contracts. Fortune noted that nearly $280 billion of this is linked to OpenAI. This has raised eyebrows, as Microsoft serves as both a primary investor and the cloud provider for the entity.
The Bitcoin dip on Thursday coincided with gold prices crashing 8% in under 30 minutes, though the metal recovered half those losses shortly after. Bloomberg senior ETF analyst Eric Balchunas noted that the SPDR Gold Shares ETF (GLD US) saw trading volume exceed $25 billion on Thursday, marking a record high.
Related: Bitcoin vs. gold: Key differences that could position BTC for a big rally
With gold and silver reaching a combined $43.4 trillion market cap, concerns are mounting over a potential “debasement trade.” This suggests investors are seeking refuge in scarce assets even as fixed-income yields remain above 3.5%. Ultimately, while Bitfinex margin longs are up, onchain data and derivatives show little evidence of a broader bullish recovery.
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